9501 W. 144th Place, Suite 205, Orland Park, IL 60462
Call Us708-448-8141
Sosin, Arnold & Schoenbeck Ltd.
9501 W. 144th Place, Suite 205, Orland Park, IL 60462
Call Us708-448-8141

Choosing the Right Type of Business Entity in the State of Illinois

Posted on in Business Law

Cook County business formation lawyerStarting a business is an exciting undertaking. There is the sense of ownership, the satisfaction that comes from working for yourself, the ability to profit, and, at every turn, the opportunity to learn. With excitement comes responsibility, however, and it is important to maintain compliance with incorporation formalities required under state law.

Not every business’s operations, needs, and goals are the same and, as such, it is critical that you choose to formally assume the type of business entity that is the right fit for your company. In doing so, you will need to consider tax benefits and burdens, liability issues, and the ownership and control of the business. There are important consequences to be aware of with regard to general partnerships and joint ventures, and key differences to understand with regard to traditional corporations, “S-Corps,” and Limited Liability Companies.

Incorporation Affects Corporate and Personal Liability

A fundamental precept of capitalism you are most likely aware of is the encouragement of business by rewarding the risk inherent in entering the marketplace. As the term capitalism suggests, much of the risk involved concerns the capital investment at the heart of every business. This capital, in the form of cash and other securities, may be provided by yourself, family, friends, angel investors, venture capitalists, or a combination of sources.  

Whether the capital invested in your business ultimately yields a profit is subject to many factors, conditions, and decisions. Less uncertain, however, is the liability for business losses. The reason for this difference in clarity is that the nature of a business entity is a known quantity. In other words, whether you are a sole proprietor, in a general partnership, or incorporated as a limited liability company (LLC) matters greatly.

For example, a sole proprietor or general partnership has unlimited personal liability with respect to debts and obligations of the business entity. Additionally, there is no separation between the business entity and business owner for tax purposes. Corporations and limited liability companies, on the other hand, shield business owners from personal liability for debts and obligations of the business entity, in most cases. Important tax-related distinctions and consequences will also apply.

Choosing a Business Entity in Illinois

If you are planning on forming a business entity in the state of Illinois, the attorneys at Sosin, Arnold, & Schoenbeck, Ltd. can provide you with the guidance you need to choose the correct type of business entity and meet all of your legal requirements. Contact an experienced Orland Park business law attorney at 708-448-8141.

Sources:

http://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=2290&ChapterID=65

Illinois State Bar Association Justinian Society of Lawyers Illinois Bar Foundation Southwest Bar Association
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